Thursday, March 29, 2012

The
Biggest Geopolitical Risks of 2012

The Eurasia Group has unveiled its Top Risks of 2012 list of
greatest geopolitical threats the world will face in the next 12 months. Each
year, this is an indispensable resource for anyone tasked with managing risk or
just interested in global affairs.

Once again this year, their top ten list is a must read, but I
personally find their “red herrings” list to be even more fascinating — and
unexpectedly entertaining.

In addition to Top Risks, Bremmer and Gordon identify four Red
Herrings, issues that despite the headlines, Eurasia Group believes will
not be sources of geopolitical instability in 2012.

2012 political transitions – In addition to elections this year in Mexico, Venezuela, Kenya, Taiwan
and (maybe) Egypt, 2012 will see political transitions in the US, China,
Russia, and France, countries that together represent about nearly half of
global GDP and four-fifths of the UN security council. Yet there is surprising
little at stake here for geopolitics and the global economy. Whatever risks
come with these outcomes will arrive in 2013 or beyond.

Eurozone breakup – probably the single most overrated risk of 2012, the political will to
maintain the eurozone remains strong among all the major political parties in
the core eurozone states, almost across the board in the European periphery,
and among eurocrats in the ever-growing European bureaucracy. Further, there is
no effective political mechanism for a eurozone breakup.

China’s hard landing – There are signs of overheated growth in China, but there’s no chance
that the government will fail to pull out every stop to prevent a meltdown—or
even a serious bump—especially in the middle of a major political transition.